Aug 2019     Issue 11
FinTech: challenges and opportunities

Financial technology (FinTech), a newly emerging interdisciplinary field that combines finance and engineering, has been demonstrating its unprecedented potential to revolutionise the traditional financial services sector in a fundamental way.  It focuses on employing cutting-edge advances in engineering, in particular information technology and data sciences, in various financial practices to make services more efficient and enhance the customer experience.

Take the business of virtual banking as an example.  A virtual bank aims to deliver banking services – such as facilitating payments, accepting deposits and making loans – through the Internet and other electronic channels.  Digital services provided by a virtual bank help customers to avoid long queues at crowded branches, bringing them a better experience.  Meanwhile, because a virtual bank does not need to maintain as many bricks-and-mortar branches as traditional banks do, its operational costs are significantly lower.  This may incentivise virtual banks to reduce their charges and offer higher interest on savings accounts to attract customers.

Alongside the exciting opportunities it brings forth, the FinTech transformation presents many engineering challenges.  First of all, as more and more transactions move online, finding the right cybersecurity tools to better protect the security and privacy of customers' personal information becomes critical to the success of a FinTech service provider.  Second, the advent of various mobile-payment systems calls for fundamental changes in the traditional financial infrastructure.  Third, the decentralised ledger systems used in blockchain technology have great potential for making transactions more transparent and more difficult to tamper with, but the technical model behind blockchain is still far from perfect.  The proof-of-work based mechanism leads to cost inefficiency and slow transactions.  Finally, recent developments in artificial intelligence (AI) and machine learning are making it possible for us to rely on computers to make better decisions in chess and other game scenarios.  But AI-assisted financial decision-making remains very challenging because, unlike in chess or other games that provide clear rules to follow, the factors governing the dynamics of the financial markets are much more complex.

FinTech has gained tremendous momentum and applicability in the finance industry.  It is creating a large number of employment opportunities to accommodate innovative young talent.  To meet the foreseeable strong demand for FinTech professionals in the coming decades, the Faculty of Engineering launched a new four-year undergraduate programme in FinTech in the 2017/18 academic year.  This is the first programme of its kind in Hong Kong.  It aims to nurture leadership and entrepreneurship among the next generation of local talent in support of Hong Kong's endeavour to grow into an international FinTech hub.

This programme features strong collaboration between the Faculty of Engineering and the faculties of Business Administration, Law, and Social Science.  This multi-disciplinary training will equip students with mastery of cutting-edge technical skills and a broad perspective on their applications and the potential legal, economic and societal impacts.  Quite a few of the first cohort of students are now undertaking internships in leading financial institutions. 

In the meantime, the Faculty of Engineering has launched the Master of Science in FinTech this year, amongst the first in Hong Kong.  This is a 1-year full time or 2-year part time course to equip graduates at Master level with the latest in technology, and business, legal, and regulatory understanding to undertake key roles in financial services and technology companies upon graduation.  The programme will welcome its first intake of students in September, the first cohort of students are expected to graduate in 2020.

Prof. Chan Chun Kwong, Director of CUHK's Master of Science Programme in Financial Technology

Prof. Chen Nan, Director of CUHK's Bachelor of Engineering Programme in Financial Technology


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